Legal Technique and Logic

Presented by Archibald Jose T. Manansala and Danica

Echague.

First Philippine Industrial

Corporation vs. Court of Appeals

Background

First Philippine Industrial Corporation is

the sole operator of countrys largest
commercial pipeline that transports crude
and petroleum products. It is a company
under the Lopez group of companies.

Background (continuation)

The plaintiff FPIC was a grantee of a

pipeline concession under Republic Act
No. 387, as amended, to contract, install
and operate oil pipelines. The original
pipeline concession was granted in 1967
and renewed by the Energy Regulatory
Board in 1992.

Background (continuation)

The respondent in the case is the Court of

Appeals and the government of Batangas
City (with its mayor Paterno Tac-an and
treasurer Adoracion Arellano).

Background (continuation)

The issue in the present case started

when FPIC applied for a Mayors permit in
Batangas City. However, the City
Treasurer Adoracion Arellano assessed
and required them to pay the local
(business) tax in Fiscal Year 1993 in
pursuance of the provisions in Local
Government Code.

Background (continuation)

The taxes assessed by City Treasurer

amounted to P956,076.04 which was
payable in four installments based on the
gross receipts for products pumped at
GPS-1 for the fiscal year 1993 which
amounted to P181,681,151.00.
The FPIC paid the taxes of P239,019.01
for the first quarter of 1993 under protest
so that its operations will not be hampered.

Background (continuation)

FPIC protested that the collection of local business tax

of the City Treasurer violated sec. 133(j) of 1992 Local
Government Code and that the City Treasurer illegally
and erroneously imposed and collected the said tax,
which merits them (FPIC) a tax refund.
The City Treasurer denied their request saying that it is
not considered engaged in the transportation
business, stated in the abovementioned section of the
1992 Local Government Code.
Since the City Treasurer denied FPICs protest, it filed
a complaint for tax refund in RTC of Batangas City.

Background (continuation)

The City Treasurer replied that the exemption

under the section 133(j) of 1992 Local
Government Code applies only to
transportation contractors and persons
engaged in the transportation of passengers or
freight by hire and common carriers by air, land
or water.
The RTC dismissed FPICs complaint for tax
refund. Case was appealed to Court of Appeals
(C.A.). C.A. affirmed the lower courts decision.

Issues
Whether FPIC is classified as a common
carrier.
Whether FPIC is exempted from paying
taxes assessed by the City Treasurer of
Batangas.

Conclusion

The Supreme Court ruled that FPIC is

exempted to pay the local business taxes that
was assessed by the City Treasurer of
Batangas, since it was classified as common
carrier under the RA 387 or the Petroleum Act
of the Philippines (1949). Furthermore, the
court defined the entities or people classified
as common carriers under Art. 1732 of the
Civil Code. Also, they classified the defendant
FPIC as a common carrier.

Laws Cited

Sec. 133 (j) of the 1992 Local Govt Code

states that the power of provincial and local
govt units in exercising taxation shall not
extend to: (taxes on the gross receipts of)
transportation
contractors
and
persons
engaged in the transportation of passengers or
freight by hire and common carriers by air, land
or water, except as provided in this Code.
This was the provision used by the Batangas
City government as defense against FPIC.

Laws Cited (continued)

Meanwhile, FPIC used the provisions of RA 387 or the

Petroleum Act of the Philippines (1949) in their argument
that they are classified as common carriers and thus, under
the Local Government Code, are tax exempt: Art. 86. Pipe
line concessionaire as a common carrier. - A pipe line shall
have the preferential right to utilize installations for the
transportation of petroleum owned by him, but is obligated
to utilize the remaining transportation capacity pro rata for
the transportation of such other petroleum as may be
offered by others for transport, and to charge without
discrimination such rates as may have been approved by
the Secretary of Agriculture and Natural Resources.

Laws Cited (continued)

Art. 1732 of the Civil Code defines

common carriers as any person,
corporation, firm or association engaged
in the business of carrying or transporting
passengers or goods or both, by land,
water, or air, for compensation, offering
their services to the public.

Analysis (Syllogism)

The said decision of the S.C. has syllogism

because it was able to state the major premise
(Who are included under the term common
carriers as persons exempted to pay taxes
under the Local Government Code, as defined
in the Civil Code as well as the Petroleum Act
of 1949), minor premise (Petroleum
transportation and pipeline operators like FPIC
are to be classified as common carriers?)

Analysis (Syllogism)

and the conclusion the Supreme Court,

applied the relevant laws based on the
facts: FPIC was classified as common
carrier under Art. 86 of Petroleum Act of
the Philippines. Therefore, as a common
carrier (as defined in Art. 1732 of the Civil
Code), they said that it is exempted from
paying local taxes stated in sec. 133(j) of
the 1992 Local Government Code.

Analysis (Form)

The decision has structure: it was written in order:

(1) facts were discussed in detail (2) the issues
brought by the parties involved and their reasons
for decision were mentioned (3) the relevant laws
(including part of the legislative history of the Local
Govt Code the discussion in Congress) were
mentioned in the decision. It was also able to
discuss what was basis of the Courts decision to
avoid duplication of taxes to be charged against
companies, especially those who have tax
exemptions.

Thank you for listening!